FOREX-Dollar up broadly up as European shares reverse gains

* Higher-yielding currencies slip on shaky risk appetite

* Sterling underperforms on expectations of more BoE QE

* Focus on U.S. data later in the session

(Recasts with latest market moves, German, UK data)

By Emelia Sithole-Matarise

LONDON, Sept 15 (Reuters) - The dollar rose broadly against a basket of major currencies on Tuesday as European shares stumbled, cooling risk appetite and propping up demand for the safety of the greenback.

Sterling underperformed broadly after Bank of England Governor Mervyn King said the central bank was looking at reducing the remuneration rate on commercial banks' reserves, fuelling speculation of further quantitative easing. [ID:nLAK002432]

The dollar index, which measures the dollar's value against a basket of currencies, rose 0.2 percent to 76.87 .DXY, staying above a one-year low of 76.457 hit last week as European equities fell 0.3 percent and U.S. stock futures slipped.

"The dollar is trading as its usual role as a safe haven asset," said Christian Lawrence, currency strategist at RBC Capital Markets in London.

"The European bourses are all lower, we are seeing S&P and Dow Jones stock futures pointing to a slight fall in U.S. equities. As a result we are seeing an appreciation of the dollar pretty much across the board."

The biggest moves were in cable, with sterling falling 0.5 percent on the day to $1.6479 GBP=D4 by 1032 GMT after King's comments which fuelled speculation that the BoE may use yet another device in its quantitative easing toolkit.

The pound erased earlier gains made against the dollar after stronger than expected UK house price and a smaller-than-expected fall in inflation.

Against the yen, the dollar rose 0.3 percent from late U.S. trading on Monday at 91.15 yen JPY=, having risen as high as 91.23 yen earlier, and pulling away from a seven-month low of 90.18 yen hit on trading platform EBS on Monday.

Traders and analysts said short-covering helped the dollar rise against the yen.

The euro was 0.1 percent softer at $1.4597 EUR=, pulling back from a 2009 high of $1.4654 hit on EBS on Monday, after a survey showed German analyst and investor sentiment improved by less than expected in September, scaling back hopes for a strong recovery in Europe's biggest economy. [ID:nLF693460}

US RETAIL SALES KEY

Market players were now awaiting further direction from U.S. retail sales data for August, expected to show a 2.0 percent rise after a 0.1 percent decline in July, and the New York Federal Reserve's "Empire State" September manufacturing figures due later in the session.

"What will dictate where we go in terms of dollar/yen and potentially more broadly for the dollar is how the data pans out in the United States," said Derek Halpenny, European head of global currency research at Bank of Tokyo Mitsubishi-UFJ.

"We should have a clear picture in terms of Q3 GDP by the end of this week. That will potentially dictate movements in yields at the short end of the curve and potentially offer some support for the dollar," he said.

Meanwhile, the Australian dollar erased earlier losses made after minutes of the Reserve Bank of Australia's last policy meeting gave little guidance to markets on when the cash rate would be raised from its record low of 3 percent. [ID:nSYC000239]

The Australian dollar stood at $0.8591 AUD=D4, down 0.3 percent on the day.

The dollar reversed earlier losses versus the Swiss franc to gain 0.2 percent to 1.0368 francs after industrial orders fell 17.5 percent in the second quarter compared with a 17.6 percent fall in the year-ago quarter.

A steady drop in Treasury yields in recent weeks surprised many and triggered speculation the U.S. dollar was fast becoming the preferred funding currency for carry trades.